An AI clinical trial platform monopoly opportunity

Opyl is AI and social media intelligence for healthcare marketing, developing a clinical trial prediction and a recruitment platform, with both currently at Proof of Concept (POC). Improving clinical trial recruitment (from months to days), supporting retention of patients in drug trials and optimising the design of trials using big data, powered by artificial intelligence will save governments, pharmaceutical and medtech companies hundreds of millions, if not billions of dollars. There is a monopoly opportunity.

Opyl is a restructure of Shareroot. Shareroot acquired The Social Science in 2018, which was founded by Michelle Gallaher in 2014. 

The Social Science did social media marketing for healthcare companies. Michelle is also on the board of Praxis Australia (involved in clinical trials) and Cancer Trials Australia, formerly CEO of BioMelbourne Network, and on the board of MedTech Actuator (a leading MedTech incubator).

Michelle was interested in using AI for better data intelligence and specifically to improve clinical trials. Shareroot was troubled with debt, big losses and U.S operations.

In 2019, Michelle took over Shareroot as CEO and restructured the company to focus on using the existing AI platform to capture and analyse social media intelligence for healthcare marketing, developing a clinical trial design tool that can predict outcomes before trials are run and a clinical recruitment solution that leverages social media channels. She and the board cleaned up the company and focused on AI healthcare. In FY2019 Shareroot lost $3.1 million with $5 million in expenses. A turnaround story: early Q3 2020 was breakeven but Opyl decided to spend more on R&D.

Opyl has two divisions: Opyl Services and Opyl Technologies.  Opyl Services are currently revenue generating with an experienced healthcare marketing team (who came from The Social Science) consulting to healthcare clients delivering social media marketing and market research. Opyl Technologies are the new group within the business, building the AI tools and platforms that will in a relatively short time become the scalable focus for the company when the recruitment and the trial design platforms launch in 2021. Opyl are consulting to product/market fit, already, offering clinical trial recruitment via social media as a POC marketing service which in time will be a scalable solution with the launch of the recruitment platform. Having a POC paid for via services shows validation of the market gap and product solution. They have been recruiting for clinical trials using social media for 3 years and have deep professional networks and knowledge.

For the quarter ending June 2020, Opyl was making approximately $400,000 annually, with a $31,000 quarterly loss, aiming for breakeven next quarter. In June the company had no long-term debt. At the same time, they raised $730,000 at a valuation of 0.10c ($3 million). In August 2020 the company was trading for approximately $2.8 million (a seed stage valuation).

As I research and work in startups, I would agree with the following data. In a study of 200,000 filings, the average seed stage valuation is $7.5 million. The average Series A valuation is $23 million. 

For the quarter ending September 2020, Opyl was cash-flow break even (they said cash-flow neutral-positive). Customer receipts grew 61% (from last quarter) to $166,000, which equates to $664,000 in annual revenue. They decided to increase R&D spend (bring it forward), hence recorded a quarterly loss.

Product/Market Opportunity

Healthcare and Pharma’s marketing expenditure in 2020 was USD$35.7 Billion. Global spending on clinical trials is estimated to reach $68.9 Billion a year

In one research paper, 20,000 clinical studies are registered every year. The median cost of a clinical trial is $19 million. Based on those figures, that is $380 billion. As many as 85% of clinical trials fail to recruit and retain enough patients in order to meet their enrolment timeline and target. Another major reason for failure is poor trial protocol design. Using AI and big data to identify the optimal design and to find participants via social media is the approach Opyl is taking.

The problem being solved is significantly reducing the risk, costs and length of clinical trials and streamlining it with AI and predictive analytics. This includes data mining social media to optimise recruitment marketing and using social networking features to improve retention. The value is in significantly reducing the risk, costs and timeframes for pharmaceutical, medtech, medical research and government clients. 

Opyl has a good strategy using AI for clinical trial recruitment and predictions (using consulting revenues to develop the platform). As Peter Thiel states in his book ‘Zero to One’, it’s best to take a large share of a niche opportunity then vertically integrate.

Deep 6 raised $17 million at a $50 million [pre money] valuation for AI that can suggest candidates for clinical trials in “minutes instead of months by interrogating medical records within hospitals”. It has raised $22 million in total. Deep 6 uses and crawls private medical data, whereas Opyl is developing social media intelligence (and other public data sets), activating patients to self select trials. Public data sets could include patent applications which can be found on Google Patents and others.

There is no dominant AI clinical trial recruitment or design platform, so there is a gap in the market. It comes down to their Proprietary Technology (AI Platform) and execution. Hence, distribution strategy, market adoption and scalable product development is critical. 

Customers & Partnerships

Current consulting clients include CSL, Bristol Myers Squibb and major Australian universities, medical research institutes, state and federal governments. In 2020 they did a distribution partnership with huumun, a UK healthcare marketing communications services company. The agreement includes a revenue share with Opyl, and is non-exclusive, so Opyl can get more partnerships. Huumun has helped open doors to the largest pharmaceutical companies in the world and is key to the company scale strategy.

In August 2020, Michelle stated the consulting and trial recruitment sales pipeline was estimated at $1.5 million to $2 million. The aim in 2021 is to convert and expand consulting clients and revenue into scalable passive revenue via the two AI-driven platforms  Once the platforms launch, Opyl’s experienced healthcare marketing team (currently working for healthcare clients) will swing in behind its own platforms in 2021 bringing considerable marketing know-how combined with scale partners like huumun, improving the company’s likelihood of market penetration and adoption success.

A highlight of management is having a health marketing, distribution and scale strategy and capabilities in place, as they go-to-market (commercialise). 

Team & Ownership

CEO is Michelle Gallaher, who is well known in the healthcare space in Australia. As stated earlier, Michelle is on the board of Praxis Australia and Cancer Trials Australia (both involved in clinical trials), formerly CEO of BioMelbourne Network, and on the board of MedTech Actuator (Australia’s largest MedTech incubator). She is a current shareholder and had 90,000 options in the 2020 Annual Report. I assume the options are vesting over time.

Marat Basyrov was on the board of legacy Shareroot and is a Director of Opyl. He owns 1.98%.

Damon Rasheed, an experienced AI developer, is an Executive Director.

The largest shareholders are Scintilla Strategic Investments (5.09%) and Altor Capital Management (2.74%).

Chairman Julian Chick had 159,998 options over shares. I don’t know the finer details or arrangement.

Categories Research